Factor demand is said to be derived demand because it:
A) requires the use of other factors.
B) depends on product demand.
C) has a downward-sloping demand curve.
D) has a constant marginal factor cost.

Question

Quizplus · Accepted Answer

Factor demand is derived demand because it depends on the demand for the product that the factor helps produce. In other words, firms do not demand factors of production for their own sake, but rather in order to produce goods and services that consumers demand.

Factor Demand Is Said to Be Derived Demand Because It